Much has changed in the British Virgin Islands (BVI) in the last 12 months. We were tested time and time again but, as always, we have come out above it all. As I reflect on what the BVI has accomplished over a 35-year period — a vibrant industry built on the basis of our creativity, combined with a spot of luck — I am proud.
Just last August, soon after we had submitted a positive and forward-looking outlook to this very publication, the BVI suffered a record-breaking flood, obliging us to abandon what was left of our homes on 7 September 2018, to a browned out, bombed out landscape, compliments of Hurricane Irma.
We were struck by one of the most severe hurricanes in living memory, and just two weeks later, Mother Nature hit us with Maria, another Category 5 hurricane, while we were still picking up the pieces left by Irma. Many of us thought that we would lose everything we had worked so many years to build, but once the skies had cleared, we were determined to continue looking forward.
The BVI is home to an international business and finance centre that mediates over US$1.5 trillion of investment globally and supports more than two million jobs worldwide – frankly, we couldn’t afford to wallow in self-pity. Amidst the wreckage of ‘Irmaria’, we worked smartly and efficiently to ensure that one of the world’s most crucial offshore investment centres remained open for business. A year on, BVI Finance and countless businesses on island can consider themselves rebuilt, and dare I say, stronger than before.
Our priority, directly in the aftermath, was to ensure that BVI Finance, the voice of the financial services industry here in the BVI, remained online and open. We were determined to ensure that the BVI Financial Services Commission (FSC) housing services, such as the corporate registry and its online company registration portal VIRRGIN were operational. In addition, we were happy that the BVI’s Beneficial Ownership Secure Search system (BOSSs) was unaffected by the hurricane.
While our online systems were safe, we continued to work in the most challenging conditions. In the earlier days of recovery, phone services and the internet were intermittent at best, so we relied on writing minutes by hand, remembering phone numbers and talking face-to-face to get things done quickly – a stark reminder of what life was like without the internet and this technological era. A further challenge was to keep the industry abreast on the progress being made without the use of technology. The hurricanes created an infectious camaraderie, and the tremendous effort industry practitioners invested here, throughout the region, and indeed the world, was miraculous.
In the weeks and months following Hurricanes Irma and Maria, the BVI’s financial services professionals were making strides and breaking records. At the end of September 2017, less than three weeks after Irma, law firm Conyers Dill & Pearman advised Despegar, a Latin American online travel company on its initial public offering. The listing, which was 13.4 times oversubscribed and raised US$382 million, made Despegar one of the most valuable publicly listed BVI companies.
That same week, Ogier’s BVI team faced down the aftermath of the hurricanes and led on the acquisition of General Electric's global water and process technologies business. Ogier acted for Suez, the French group, together with global counsel. The firm went on to advise its long-standing client Toys "R" Us on its global reorganisation and restructuring.
There were many more instances of deals being made, and work being done while our community was still (literally) picking up the pieces after the life-altering catastrophe. To work on a multi-billion-dollar merger or IPO in the midst of the adversity that we suffered shows how talented, focused and determined the professionals who work on our islands truly are.
For our financial services firms on island, it has also been a better year than many could have expected – the spirit that got us through the earliest days after the hurricanes has lived on into 2018.
Bigger and Better
In early 2018, we were proud to see the launch of the new Limited Partnership Act (LPA). This legislation allows investment funds all the typical benefits of limiting liability, as well as several unique features, marking an evolution in limited partnership law. Now partnerships in the BVI can choose a variety of business structures and still enjoy the flexibilities and benefits a traditional incorporation offers.
To ensure that our business legislation is modern and reflects the actual landscape in which companies operate, we made sure to work with our private sector to develop this law. The LPA was a product of excellent collaboration between lawyers from eight firms based in the BVI, who have worked tirelessly to create this innovative statute.
In June, the highly anticipated Micro Business Companies Act (MBC) came into force. Limited liability companies have been at the crux of business growth and economic development across the world. However, micro businesses, which make up 70-80 per cent of most economies, have been overlooked or ignored in the area of incorporation, giving them fewer options than large organisations for running their business.
The new MBC will redress this balance, providing a simple, affordable corporate structure for those businesses which hitherto have not had access to incorporation services. The charter of each micro business corporation, containing information on the purpose of the corporation, will be publicly available on the website of the BVI’s independent regulator, the FSC – a further indication of the BVI’s commitment to transparency.
Innovation is at the heart of the MBC. All transactions relating to the incorporation and registration of a micro business corporation, including the filing of documents, will be web-based. In this FinTech era, web-based platforms such as this are vital to our survival.
In 2018, we also saw the launch of Bank of Asia (BVI) Limited, one of the world’s first fully digital, global cross-border banks. The bank will serve the growing needs of companies conducting cross-border business, providing core banking services to international companies, trusts and high-net-worth individuals.
Operating under a banking license from the FSC, it is the first ever digital bank in the BVI – the first to be licensed in the Territory for over 20 years, might I add. Whilst it is domiciled in the BVI, customers will be able to access its digital platform from anywhere in the world using any smart device.
So, as you can see, we continue to make waves in the world no matter what. An example of this is our recent trade mission to the Asia-Pacific region a few months ago, covering Hong Kong, Singapore, Beijing, Hangzhou and Shanghai. From the tiniest businesses, to the developers of the sleekest racing cars in the world, across numerous venture capitalists located in the region, to the most challenging real estate development projects— they all had one thing in common—their use of the BVI Business Company. Starting in Hong Kong in week one, then crossing over to Singapore before taking a six-hour flight to Beijing, and then on to Hangzhou, the refrain was the same. BVI structures have been their ‘go to’ in the past, and will continue to be in the future. What’s more, having the Bank of Asia as our newest ‘product’ did not hurt either!
Although we have a long way to go to full recovery, we have come a long way. Whilst we look forward to continuing to build a stronger, better and greener BVI, we will not rest on our laurels as there are many more challenges for the people of our islands and for the businesses that operate here. Nature will not rest – sadly, a changing global climate means we can expect storms of the magnitude of Irma more frequently in the future, and we must be prepared.
We also face man-made storms.
Earlier this year, the UK government passed the Sanctions and Anti-Money Laundering Act, which requires all its Overseas Territories to create a public register of beneficial ownership by the end of December 2020, a decision that is deeply flawed and unfair. It takes no account of the constitutional position of the BVI and the right to manage our own economy, of which business and financial services remain a critical part.
We believe that the key to fighting financial crime is the adoption of global regulatory standards to ensure a level playing field. The current standard is a verifiable beneficial ownership register accessible to appropriate enforcement authorities, which is what we have in place.
The BVI has made it clear to the UK government from the start that, should this change, and should a public register be adopted as the global standard by the global regulator, (the Financial Action Task Force (FATF)), it will comply. It is also important to recognise why it is important that there is global agreement on moves to fight financial crime, rather than unilateral action by individual countries.
The people of the BVI have begun to use the hashtag #BVIStrong, not only to tell their stories of the 2017 hurricanes, but to also voice their concerns over the aforementioned man-made storms. Overcoming adversity is our specialty – the goal has, and will always be to provide the best in class service to our clients. The BVI is a sound and reliable jurisdiction that has worked particularly hard for its accomplishments.
Lorna Smith OBE Chief Executive Officer and Founder at LGS and Associates, formerly Interim Executive Director, BVI Finance, British Virgin Islands. Lorna Smith has more than three decades of experience at the highest levels of the public service in the British Virgin Islands. Over the course of her senior-level service, Ms Smith has developed extensive relationships with leaders from the business community, international NGO’s and government leaders from around the world.